BCOV - Earnings call transcript Q3 2019

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Operator

Greetings, and welcome to the Brightcove Third Quarter 2019 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Brian Denyeau with ICR. Please go ahead sir.

Brian Denyeau

Good afternoon and welcome to Brightcove’s Third Quarter 2019 Earnings Call. the close. in discuss issued press will market after we results our announced release Today, on call Financial me and With the Rob Executive Brightcove's Noreck, Officer; Chief Brightcove's Chief Officer. are Jeff Ray,

XXXX full financial make expected execute fiscal new cash our Act our XXXX, the maintain During the may flow, existing as considered our statements of the leadership Safe XXXX, and forward-looking go-to-market strategy, and Private related free quarter and and the positive to our customers our our well made to provisions year profitability growth business our expand position including be on pursuant ability statements acquire guidance as are Harbor call, fourth customers. ability that upsell to to Securities of position, our for will the to we of to and Litigation concerning Reform ability

words upcoming representing expectations. we reflect and statements as identified as as of as be expect, may should future subsequent any of of views such indications today not anticipate, with reflected we These views similar only upon be often our our Forward-looking date. statements or

subject are that cause from variety results of to risks could materially and expectations. to uncertainties differ a actual statements These

Form other filings. and For those SEC results, on please could as filed contained recently other important discussions refer updated our in risks XX-K of affect material and report annual to that by factors our actual our most

website issued showing close measures. available versus of www.brightcove.com. which currently today's after is non-GAAP the course will release schedule on be to found today, our non-GAAP Also we GAAP press market in our can There during at refer certain a reconciliation call, financial results

year our our fourth update call, our agenda review strategy. outlook the the our Rob provide quarter with results, for detail full results finish of and regarding for well third on an of XXXX. financial will additional as a summary Jeff and review quarter as operations terms will In today's a our of

that, call over to With the let Jeff. turn me

Jeff Ray

quarter and in made can us everyone progress in growth our you, future. third on and deliver for We the results. that thanks our go-to-market roadmap consistent, discuss profitability significant, Thank additional revenue joining sustainable engine a development and Brian, to building today to product

We changes I and for Brightcove want entire our are thank across the strategy. making fundamental business, team to embracing the

Let's results the $XX.X start We of guidance. year-over-year third revenue million, the and of our briefly by adjusted up above reviewing XX% our $X.X was for financial quarter. EBITDA which quarter was high-end million, delivered

plan. an will XX we of time. the established evaluated in we've detail, our on Before profitability strategic I deliver we plan third process, growth update to accelerating are I confident quarter Since months more arrived that business. Through provide and every discuss would strategic ago, this over aspect I like a rigorously have

is this plan In to align have executing on to working XXXX been have strongly the believe the We business substantial made we hard execute working. properly it our and strategy. on changes Company throughout

successful who they without see join attract thrilled achieve primary talented for the top We to know Brightcove to people, be opportunity plan are no our we who success. has and employees that goals. help the chosen have with to been current identify us Our because focus a Brightcove will employees can right so significant talent incredibly

market. be will is to can it I have be our clear that plan company in dedicated a the the Day first. no that video customer support best Brightcove and X, put Since domain know customers also providing the We successful been if expertise customer-centric applications, doesn't that

process a sales methodology. to we live comprehensive that promise, discipline has sales the we've operating sure up sales every our certified time for new been across that enablement in first the instilling make board, rep investing in To including

messaging of ever have now and the teams and marketing more will business create predictable more been. a tightly integrated they sales than This are future. consistency Our in alignment

The amount we our XQ, pipeline had on capacity recent in some of continue will development. has and naturally made expect change it XQ. that impact in have sales sales and performance quarters in we This hiring and affected our

will growth and and revenue a deliver have for to retention sales restructuring us near-term have order fully we on necessary and impact our on in rates, is this opportunity capitalize While the for our our rebuilding value team customers to shareholders.

in profitability clear, to our are this on and we this change is after potential our strategy of products and We attractive does the go and remain and not video growth can of parts profile To most focused designed well expectations that the go-to-market confident what for our be. Brightcove the market be strategy, opportunity.

few spend from demand launching We've reviewing markets, key our towards as generation. for a are: made a reminder our broadcasters, applications and marketing purpose-built important third I'd like performance. progress regional corporate target some OTT, our takeaways to communications, key minutes quarter and which

We growth deliver markets. milestone can solution content introduction platform. a leverages our our OTT this Brightcove effectively experiences number video OTT so SaaS significant achieved experience premium a these first targeting high in Beacon, in any companies Brightcove and cost monetize and with different extensive and launch quarter of across ways. purpose-built of the new the quickly Beacon our device

received approach positive Annual a Brightcove unique attention. problem. experts Brightcove of industry this and feedback solving and Conference from to incredibly highlighted where was Beacon's launched We at in Beacon Amsterdam lot in prospects the IBC September, The it

the time that Beacon. acquire Brightcove our to market to acquisition we small into accelerate and a leverage is our exciting some tuck-in OTT To quarter made incorporated technology expertise, in

most look be modest customers we identifying additional to strategy market can can the use clear could opportunities leverage We'll to value be potential to we that our same willingness that segments we focuses where attractive. investments We the opportunities also add continue new explore expand deep the a framework to on think some video In that There to our and one-time customers. will is expertise. product spend TAM. quarter, for making fourth from

the marketing the products priority. a offerings new and efforts we focus start in products entire on to tightly at will be to team aligned year. go-to-market new of our on key these our demand generation the is We're our training these our Ensuring revamping of activities are new process

We're also thought and focused market. in leadership raising Brightcove’s the brand profile on

clear and Global than We Index, recently views and leaders on a other To are Brightcove from any end, regional both in to and launched vendor. the customers video access aggregates we basis. anonymous data globally have which that Video media the better Brightcove’s data trends global

versus in videos. the the report the ultra market and share for iOS Some popularity initial gains of increasing Android long-form of long-form and key findings included

I priority. result we attract our very the upsell customers. steps existing predictable good model discussed our feel at top that a retain improves to organization a customers is and selling As taking We will new ability earlier, revamping in sales and are

recently customer on leaders focused our discussed, As previously we new sales specialized We're approach. for back our and in into organization acquisition, progress a with Japan. America leader regions the early certain farthest selling dedicated in most new sales We've and signs retention, our new along base. North of encouraging also sales including seeing brought of go-to-market have implementing teams a new number that in are

two quarter team had nearly Our its North best in media is significant progress making years. and American

roadmap this seeing including good the We team they're in product with and quarters new third in our traction have customer a recent quarter. strategic the rebuilt signing of completely

aligned much The segmentation a investments engagement. to sales via is more in Expanding and is that team talent focus. and market its approach our strategic of reach better region. leadership through to had the we quarter the row impact a and in from strong and have that our in area channel new taking reflects sales second customer realizing made EMEA partnerships positive another we're

it program. LaunchPoint We the opportunity a impactful exciting joined were medium how to increasingly marketing see pleased value to recently video announce most in Marketo’s in modern with customers We see and Marketo’s that work we the program. who is an

like we one The that the some the quarter to multimedia great with on the wins now Broadcasting Christian the Beacon. would aid, Brightcove as and global its a third of market. from organization Brightcove humanitarian first have focusing I Network, third evangelism momentum in relationship in highlight positive on reflect expanded customers quarter the

for audience, on application, distribution across Beacon TV. is that Basketball basketball the and properties. order and app League men's in a professional Brightcove one reach published using Zealand. stop-shop mobile, the multiple is new its seven smart together league CBN In to platforms effectively National to content TV deploy Australia connected New their Family has news CBN brings and

live NBL the of Brightcove to through rights clubs. also help OTT NBL’s will Live for service, TV, different the NBL live to streaming as in markets. league well season and deliver for streaming opportunities U.S. following power with for recent syndication Facebook social their other associated on-demand will subscription all video Brightcove nine deal as

to new provide Brightcove In the Rawnet, high will broadcasters screening with company, secure Fremantle experience signed distribution OTT three-year buyers developing for and BXB on showcase power their a them and are content iOS production world. to global and partnership to front-end solution Brightcove help video quality desktop, a app their agreement Leading applications around through with who a experience. with a

the technology the underpin seamless experience video experience. video advertisements a and costly an Asia subscriber manage as OONA to for as was web, Video their service-side broadcast-like ad having in-house Brightcove in their apps The on and QX. mobile a without in OONA, OTT OTT work own for telco iOS on-demand insertion well telcos to that hardware app and agnostic live with will platform platform provide ad enables exciting to launch bases development win Android,

is live the globally half the to to go in it's approximately United combined. audiences serve slated with service positioned Philippines Indonesia, services The billion and States, and Vietnam, localized a

changing deliver video. video the its new to proves that help Finally, the Brightcove experience that to website. matter integrations is a company marketers. and way delivering with are market we goes win selected This technology Cloudera to it The on

our continues We strategic to making we position faster, committed progress We're to up, shareholders. growth future. will and revenue our consistent across that make and wrap customers changes deliver the To in delivering are business more the value on predictable to the us confident to Brightcove remain initiatives.

turn me let you the through that, to over Rob? numbers. walk to With call the Rob

Rob Noreck

further, million, was revenue quarter everyone. revenue $XX.X and was I was $XX.X Jeff revenue near quarter services in for support range. quarter and detailed the of of full $X professional our the you, XXXX. Breaking which and outlook was million good review the subscription third will fourth with then finish Total year third afternoon begin end I the will revenue our our down with a Thank and million. and guidance high

we performance track aggregate We committed on in performance was XX% months increase. our useful year-over-year to XX-month XX-month believe backlog a subscription define revenue the represents a This million. for obligations XX investors to as $XXX.X metric next X% amount our initiatives. of and a future year-over-year related is backlog, organic strategic the which increase

Europe more, of revenue generated XX% we North and Breaking during revenue XX% XX% our quarter. international our generated On a basis, generated internationally. in quarter Asia-Pac America XX% and a of little our down Japan of revenue the geographic and revenue the during

a now to Let we share supplemental me the quarterly on turn metrics basis.

is time retention our third earlier. reflecting usual, of mid-XXs. at driver rate of was in recurring The below quarter in referenced dollar Our XX%, sales of than low was the target to changes part, materially upsells Jeff lower which largest renewal range the the some

count premium customers. of customer Our of at third were was which the X,XXX quarter as end X,XXX the classified

within customers, revenue. our premium for in which ARPU level our revenue and annualized excludes starter up annualized XX% was at which premium Looking was per $X,XXX our base, customer customer entry year-over-year average $XX,XXX, our pricing

$X.XX GAAP for Looking million was profit Operating at a $X.X our loss our and was was results $XX.X gross million. per loss the quarter. basis, share on

revenue results, XX% non-GAAP a million represented revenue the the to XX% gross quarter XXXX. Subscription and our support a in the and XX%. in compared of margin margin was our quarter gross to profit ago represented Turning and $XX.X the quarter of of $XX.X period XX% million year in to margin non-GAAP total a generated third third our gross gross in compared

and the subscription with gross support margin. sequential We are pleased improvement in

tracking year. well Ooyala of the plan end the by our platform of to onto are We customers transitioning the Brightcove

investments the third Non-GAAP high operations the a and Adjusted driven loss now of end ago that fourth $X.X third third of income guidance our will good $XXX,XXX by was in above the the year management the quarter operations XXXX. The was quarter. certain outperformance from and from quarter non-GAAP in quarter sales million compared of for $X.X quarter. in to of $XXX,XXX happen the compared period was range EBITDA timing to the million in in

loss share per per XX million This $X.XX the on income on average $X.XX shares period. a compares outstanding. net based outstanding year shares average of in Non-GAAP ago weighted million to weighted was share XX.X

$XX.X cash equivalents Turning million. of to the and cash we cash the balance flow, ended quarter sheet with and

flow capitalized cash from $X.X third we and the million into operations account and During million free after capital was $X.X expenditures internal-use software. generated flow million, in quarter, $X.X in cash taking

the and providing full finish guidance I’d year fourth for now like XXXX. our by to quarter

and to of quarter, are revenue million, million we profitability to the a For $XX.X professional expect $X.X approximately Non-GAAP million. average $X.X $X.XX we is perspective, the fourth of adjusted operating net revenue. million weighted $XX.X shares non-GAAP EBITDA million income outstanding. services $X.XX million expected a to in to XX.X including million share of on targeting of range From income $X.X $X.X per million $X.X to be based of

guidance outlook the to $X.X million to revenue. and we revenue Turning are revenue million to of our a in services XXXX, million. overage professional $XXX.X $XXX range This $XX for year of updating full our anticipates million

and million. EBITDA million now profitability, of $X.X operating non-GAAP we million $X terms income In $X.X to $X.X of to of expect adjusted million

expect of shares weighted based to net addition, per share $X.XX XX on In outstanding. million $X.XX non-GAAP we income average

the profitability updated earlier. mentioned reflects onetime investments Jeff outlook Our

we million initiatives. right For of track to more To continue up, $X free and remain outflow million. profitable revenue on position growth confident cash to We are significant and on year range cash we for over we to predictable executing wrap flow, full value a faster, generate shareholders. expect in our Brightcove make strategic time the to progress $X

Operator, Q&A. now we'll are to that, your we begin With questions. take ready

Operator

be Krowl Our now and B. you. conducting from [Operator session. Thank Instructions] coming today We’ll is Riley first question-and-answer a Company. question from Lee

now is live. line Your

Lee Krowl

housekeeping Great. couple taking quick Thank you A my for questions. of items.

from was Ooyala First, the quarter. what contribution and also number overage curious the in then just

Rob Noreck

Sure. was was million. million. from Ooyala X.X Overage $X.X number Contribution

Lee Krowl

integrate margin front, Got Ooyala continue it. margin. saw Or are there gross some some gross we And customers? you improvement? kind improvement in you expect is just on nice leveling of further the then of opportunities still as sequential – kind Would to out there of Ooyala the

Rob Noreck

the anything but long-term. some really there's don't the will think I opportunity, in it in I be happening see short-term.

Lee Krowl

kind headwind more sales productivity Got that of fact it. to perhaps a need the retraining function alluded that the it's Is of And employees modest existing adding continue and of issue a new is that force guys then you restructuring. of to just a to related headcount? a you're function you of hiring or

Jeff Ray

we both. training This is it's who and have stay Jeff. onboarding the people retraining Thanks we're It's for the been salespeople rescaling see with question. want on. we also Certainly, to existing but us, that

sales program mastery is And stopping commission to So for on the first there. time, We'll has are now everyone everyone. in the everybody bar gone who they a verify running certification through through in has that November to a gone training, class raise not on qualified. fact, be we're

Lee Krowl

Got you we especially And definitely products. Is of I of Marketo-like a near-term? new should out the Marketo channel guess becoming announcements more announcement, partnerships? with progress see then more as in priority becoming these good roll expect some the important to in it. terms that

Jeff Ray

think explicit, Again, about we're talked the a very haven't other we and When been of use OEM more is key after going Marketo it serious so we which encouraged Yes. this I from people with the any interest companies. are overall just excited reseller assumed as business. been still the was that about And which in a strategy, component channel we've the and just team, very, we seeing opportunity lot the model, a about. is launching the really of past, of channel

Lee Krowl

And it. me. question Got then last just for a

just your those transition to marketing You be for product guys of in terms primarily perhaps related, that guys into there's QX. Is related, supposed or you expenses indicated are QX earmarked product dollars of efforts. consulting development kind just a curious, of that where spending that related were

Rob Noreck

side research in dollars Rob. product and really there's consulting and there things, to of in some Yes, on focused research. the order that It's focus is this

Lee Krowl

for Got taking it. Thanks my questions.

Rob Noreck

Thanks, Lee.

Operator

Our is Instructions] from from [Operator coming next Dougherty. Frankel question Steven today

Your line is alive.

Steven Frankel

but went around, focused difficult? turn was quarter to the Good it if afternoon. do it on portion was this made out How we that's recurring Jeff, you backwards this disappointing and force about long that, anything talk quarter. know what which you built this I retention call of dollar that especially that sales rate, again you might the think you've let's takes quarter. this a

Rob Noreck

Thanks Rob. and a good for is the This question it's Yes. one.

on it's that think retention recurring what seeing the we're on I number. sales we're what's renewal, that upsell weakness about force as in think weakness dollar rate, that really when I where of time the mentioned in and in the you issue that's the script, seeing the at causing and and

of we change the train We're them, in part around that expect gone that we to train next the the And through sales turn over first talent. force. of we've lot a adding as to and period to talent, We're mentioned, great to see have on but continuing start Jeff year.

Jeff Ray

that addressed that that, nice our add we and going pleased bit high customers the in the right telling Just of number had noticed our hitting reliability. these with that. focus Scores, driver one the The Net months little primary XX the and was to reliability a dissatisfier. to We've that us a the customers is We're in are they're we’ve in numbers things were ago that. Promoter work and uptick on. to because on we're committed We to all-time to improvement that have quality performance

on level, tactical So, the that kind the account matter. of frustrated things moving that we're detail we're we with the really while know needle

Brightcove application are value that's The than to more rather Beacon. the is more our products in tool in third OTT got announced nature And customers. other ever and first of those sticky product so for centric we just drive key centric, and the greater thrilled that that component we're moving are by form more why quarter

Steven Frankel

of into is you year, QX continuing we headwind renewal kind And go as this should of XXXX? creates in concerned be that given issue the Okay. biggest the period some the QX

Rob Noreck

talking have yet. between do the to we're and currently of about no the to change long-term our year, now not Yes. We XXXX a expectations. Steve, and end still lot there's

Steven Frankel

some this could of pushed on of being incremental many dollars kind maybe were and expenses notion dollars expenses many around coming of size that, of of investment some product in And and millions are Okay. you area, into QX? incremental the next QX new how millions how pushed

Rob Noreck

million total, In two. about it's $X.X sure. Yes, the between

Steven Frankel

What about that's Okay. XXXX, decide a might payoff? are do new have have late it, you a area, XXXX in the thinking product you that to or you this to product And timetable? assuming something for for that what's

Rob Noreck

get a million but think I don't light dates, We terms. XXXX want away. years those on is specific don't in to

Steven Frankel

much But good How ARPU from is come How that for from customers Does growing should that to hear. that's that? and more usage? growth room think about we come there these does apps?

Rob Noreck

our combination Yes, some to years, to will the customers think come as existing that's the growth a is of I areas. you're sell in historically up continue and bit and little One inch of couple products last these going kind that ARPU and for being done a of going able of customers. have see usage from new continued to into it's then these to

Steven Frankel

Okay. among rate retention the Ooyala the base? customer And in any material change

Rob Noreck

could repeat that? you Sorry,

Steven Frankel

does Ooyala of What like? them those customers, percent of the what pipeline maintain of been renewals XXX% you for them? to Have look or able

Jeff Ray

with retention Jeff. We're rates. It’s pleased the

that. we at pleased models expect the the retention and built As we rates, on past, are where when well are and with model we've what we're to within said our we’d and with the upsell in opportunity looked our renewal rates, we built we assumptions,

Steven Frankel

you. Thank Okay.

Jeff Ray

you. Thank

Operator

end reached comments. Ray floor to our you. back closing like of session. question-and-answer to any turn Jeff further I’d Thank We’ve for over the

Jeff Ray

is you Thank lot thank Well, the built for momentum business. A you. of getting dialing-in. in all

encouraged starting coming. key as new excited on strategy we about the We're at more ago shared with video. that to segments and are year consistent we're with time targeting to there it. a growth They're are very you within as this growth we very very ship We very, now reveal starting our products, see about

carry very and I shortly. can strong have momentum everything all to all For talking about fourth us, Thank into you quarter it's to look that and doing we the year. a new forward to you

Operator

does Thank teleconference. today's conclude That you.

you line for at your wonderful your participation and time day. You this have today. a may We disconnect thank

Brightcove (BCOV) 23 Oct 192019 Q3 Earnings call transcript